STRATA Skin Sciences, Inc. Q2 FY2024 earnings call

• Total revenue grew 2% YOY to $8.4 million, and operating expenses declined by approximately $860,000 or 14% YOY, with loss from operations decreasing by $1.5 million.
• DTC marketing spend is ramped into year-end to increase patient awareness of XTRAC, with encouraging DTC results including lower cost per lead and appointment metrics than in 2021, and expanded DTC focus to 28 active marketing areas from 4.
• Installed base of XTRAC devices decreased from 907 units at the end of Q1 to 881 units at the end of Q2, with equipment revenue up 11% YOY. Domestic installed base of TheraClearX devices grew to 117 units in the US.
• Completed a financing raising $2.1 million in gross proceeds, with proceeds used for turnaround and growth efforts. Chris Lesovitz is leaving, and John Gillings will be the new CFO.

Total revenue for the second quarter of 2024 was $8.4 million, which grew 2% year-over-year. Global net recurring revenue was $5.3 million in the second quarter of 2024, down from $5.5 million in the same period of 2023. Equipment revenue was $3.1 million in the second quarter of 2024, an 11% increase from $2.8 million in the second quarter of 2023. Gross profit increased to $4.9 million for the three months ended June 30, 2024, from $4.3 million in the same period of 2023, with the gross profit margin at 58.5% compared to 52.3% in the prior year.

• Continue to ramp DTC marketing spend into year-end to create patient awareness for XTRAC.
• Expect to turn positive on gross domestic recurring billing with increased DTC efforts.
• Plan to continue optimizing XTRAC footprint in the US, with anticipation of net placements of devices as utilization in kept accounts increases.
• Anticipate average revenue per device to expand, leading to net placements of devices towards the end of the year.

Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, refer to the risk factors described in STRATA Skin Sciences' most recently filed annual report and Form 10-K and subsequent periodic reports filed with the SEC.

Q: Asked about agreements and approval in Japan, international equipment sales impact on margins, and changes with Japan launch.

A: Dolev Rafaeli discussed international markets, Japan's market characteristics, and how gross margin is affected by depreciation and device redeployment. Explained historical context of device placements and removals and anticipation of margin improvement as depreciation reduces.

Q: Inquired about shrinkage of installed base, new placements in the quarter, and changes to parameters for unproductive accounts.

A: Dolev Rafaeli stated parameters for unproductive accounts remain the same, removed more than placed in Q2 (placed 7, removed more), anticipated net placements as average revenue per device expands, referencing historical numbers for comparison.